[JamesLeonis]

It couldn't replace the command prompt because of security issues. Basically it made it very easy for virus writers to run powerful commands that the OS would blindly run. In response, Microsoft not only made scripts not executable by default, there is also a "signing" thingamajig where a script won't be executable unless it is specifically signed off to run[1], including those written by you.

[1]: http://www.hanselman.com/blog/SigningPowerShellScripts.aspx

It also isn't a drop in replacement for the command prompt. They exist as two separate programs, instead of the Unix general Terminal and shells run inside.

In my experience, Powershell has a lot of potential but is hampered by clunky interfaces and the lack of a true robust security system across the OS. Add on top of that the large malware industry around Windows, Powershell is basically a non-starter as a replacement for the vanilla command prompt.